New systems and strategies can be highly disruptive to your business. Organizational change management can help ensure your transition to new processes goes smoothly.

What is change management?

In modern IT, change management has many different guises. Project managers view change management as the process used to obtain approval for changes to the scope, timeline, or budget of a project. Infrastructure professionals consider change management to be the process for approving, testing, and installing a new piece of equipment, a cloud instance, or a new release of an application. ITIL, ISO20000, PMP, Prince2, as well as other methodologies and standards, prescribe the process to gain approval and make changes to a project or operating environment.

The following article focuses on change management from an organizational perspective, to distinguish it from the process-based changes of ITIL, Prince2, and so on. Here, “change” refers to any event or program the enterprise undertakes that causes major disruption to daily operations — for example, a new ERP installation or digital transformation. The clearest definition of this type of organizational change management (OCM) is provided by Sheila Cox of Performance Horizons who states: "Organizational change management ensures that the new processes resulting from a project are actually adopted by the people who are affected.”

What are the benefits of change management?

Change management reduces the risk that a new system or other change will be rejected by the enterprise. By itself OCM does not reduce costs or increase sales. Instead, it increases the teamwork required for the enterprise accept the change and operate more efficiently.

When is organizational change management needed?

OCM is needed whenever the enterprise undertakes a program or event that interrupts day-to-day operations. Such an undertaking will impact:

The work content of individual jobs. Many jobs require individuals or groups to perform tasks repeatedly. An accounting department has daily, weekly, monthly, and annual activities. Over time, most people become comfortable with the tools provided and the rhythm of the work calendar. Even simple changes may disrupt the workflow and be disconcerting for the staff.

The roles of individual employees. Many people view their value to the organization as being a good technical architect, programmer, or security specialist. When asked to take on a different role, they may become very uncomfortable. People with excellent technical skills often struggle when asked to become managers. Rather than performing all of the tasks, they have to learn to work through other people. Once they are no longer rewarded for the skills that made them successful, employees may question their purpose.

The organization itself. Executive teams debate major changes for months before making final decisions, enabling each member to gain a deeper understanding of the effects the change will have on the enterprise. Even if they don’t agree with the final decision, they have time to determine whether to accept the new direction or to depart gracefully. Individuals lower in the hierarchy rarely have time to process major changes. Executives do not want employees to worry about events that may never happen until it is clear the change will take place. In addition, tighter insider trading enforcement prohibits executives from sharing information about upcoming mergers, acquisitions, or divestitures. As such, individuals who are not part of the executive team have much less time to prepare for the planned change and may decide to leave while the change is undertaken, making change management more difficult.

What are the requirements for change management success?

Organization change management programs require several things to be successful:

The right executive sponsor.

Cultural willingness to adapt and change. All organizations resist change to some degree, but ones that follow the dictum “if it ain’t broke don’t fix it” often need a major wake-up call to behave differently. The public revelation of sexual misconduct allegations against Harvey Weinstein provides a dramatic example of a call to address a long standing problem. A number of enterprises that had done little to stop sexual harassment suddenly took action.

Skilled change management teams embrace the organization’s emotional energy. They use company stories, language, and behavior to emphasize those parts of the current culture that are aligned with the planned change. These teams celebrate behaviors they wish to encourage by publicly recognizing individuals exhibiting these behaviors. Change management teams use every opportunity to reinforce the way the change helps the enterprise.

Individual willingness to change. Individuals must be willing to examine new information and adopt new behaviors and approaches. Since most people prefer the status quo, this can be difficult. Typically, most people only accept changes that make sense and improve their job content or their work environment.

Rewards and consequences. Major changes need to be reinforced by rewards and consequences. Individual performance plans with specific, measurable results need to reinforce the desired future state. Individuals who meet their objectives need to be rewarded appropriately and those that do not need to face consequences.

A consulting firm, wanting broader market recognition, encouraged all partners to speak at industry conferences and to write for industry publications. Several partners became very successful at both. While their articles and talks generated new business, the client revenue each partner managed actually decreased. When the compensation plan did not reward them sufficiently for the additional firm revenue to offset their decreased client revenue, they were very unhappy. The firm’s leadership team had to adjust the compensation plan quickly in order to prevent the partners from leaving.

Why is change management difficult?

It takes a great deal of time to change attitudes and behaviors. Application implementations, even large ones, are easier to plan and manage; project managers know when a module is tested or server installed. OCM managers have a much harder time measuring progress; gauging support can be tricky. Just when it appears that a key individual supports the change, the person raises another objection and returns to old behaviors.

Executives, often assume that everyone impacted will find the business case so compelling they will automatically accept the new way of operating. But most people resist change or are unpredictable. This creates several difficulties for the OCM team:

Change management is not deterministic. Unlike computer programs, people can be unpredictable and illogical. OCM activities that are effective with one group may be ineffective with another. Messages may resonate with some people but not with others.

Change management is a contact sport. The OCM team needs to interact one on one with individuals who will need to change. Emails, videos, and other mass communication can reinforce a message, but these don’t make people feel the enterprise cares about their difficulties. Change is personal; sometimes people whose jobs have been transformed need someone else to listen to their frustrations before they will accept the new reality.

Midlevel and frontline staff must be engaged.Midlevel and frontline staff can make or break a major program. Since they understand the operational details of the current processes, they can anticipate potential problems and likely customer reactions. Individuals who are not sensitive to the disruption that major change can create often believe it is more efficient to involve fewer people early in the process. While involving more people in the change process creates additional work for the OCM team, it also builds commitment. Midlevel and frontline staff who see their suggestions accepted are more likely to support the final result.

Cultural differences can make OCM difficult. Cultural norms are different around the globe. The OCM effort needs to be aware of local customs even with a global system intended to standardize enterprise operations. Care needs to be taken to be sensitive to these and other cultural norms:

Communications style. Denmark, Germany, Israel, Netherlands, and U.S. are very direct. India, Japan, Pakistan, and the Philippines tend to be indirect and believe it is very important for both parties to save face. In these cultures, individuals avoid saying no, and frequently mean, “I understand” rather than “I agree” when they say “yes.”

Time orientation. Meetings in Germany, Switzerland, and the U.S. start and end when scheduled. Little time is dedicated to introductions, even when some attendees are meeting each other for the first time. Spain, Thailand, Brazil, and the Caribbean are less concerned about time. Things can wait until later in the day or even tomorrow. In such countries it is impolite to rush into a business discussion; only after the host and the visitor have shared refreshments and pleasantries can business begin.

Australia, Canada, Israel, New Zealand, U.S. have little hierarchy with almost everyone on a first-name basis. Conversely, hierarchy is very important in India, Iran, Japan, Saudi Arabia and other countries. Junior staff in these countries invariably defer to the senior person.

Violating cultural norms can cause great resentment. The best OCM teams are very sensitive to local cultural norms even when the people at headquarters demand a standard project rollout and standard OCM program globally.

Change management may be an afterthought. With major IT efforts, the project team is often consumed by business process changes, interfaces to other systems, data cleanup, etc. If the OCM effort is not started concurrently with the rest of the program, it may only be started when the program team experiences resistance from end users. Even enterprises that assert that OCM is critical sometime reduce or eliminate the OCM budget if the overall program gets too expensive.

Change management can be started too early. The OCM effort needs to be tightly coupled to the rest of the change program. This is particularly difficult with major IT programs when the OCM efforts begin before new system details have been finalized. In the absence of tangible information about the new system, the OCM team either sounds vague or describes what they hope the new system will do. When the new system fails to materialize quickly or has less functionality than anticipated, supporters often become disillusioned.

OCM and the change program may be disconnected. The rational and emotional cases for change need to be integrated tightly. Frequently, executives communicate a rational, logical case for change that lacks emotional appeal. People respond to calls to action that make them feel they are part of something that is more important than any single person and are energized by visions that capture their hearts as well as their minds.

Meg Whitman, former CEO of Hewlett-Packard, integrated appeals to the heart and mind. As she discussed in her post, “The Power of Transparent Communication,” she and her team attempted to build a strong connection to HP’s history and traditions. They reinforced the “HP Way” cultural value that the quality of the work is as important as position in the hierarchy.

Why do individuals resist change?

Resistance is a natural part of the change process. When expectations are disrupted, individuals often feel uncomfortable. Even positive changes such as a marriage or the birth of a child can cause discomfort. Here are some of the reasons why employees resist change and how it affects the change management process:

Individuals may lack the necessary skills or knowledge to operate in the new environment. Fear of the unknown can keep people from fully participating in training. Some worry they will not be able to understand how to operate the new system and will be overshadowed by smarter colleagues. Other groups may lack the resources to operate in the changed environment. This can become a problem during an acquisition if the acquiring company folds a department from the acquired company into its department without appropriately increasing staffing. When acquisitions are justified by claiming the merged companies will eliminate redundant jobs, management is sometimes tempted to eliminate staff before the merger is fully complete. Mergers that occur on paper but not in reality disappoint customers, fragment staff loyalty, and erode IT service levels. For more on this see “Half-baked mergers.”

Unwillingness. People who don’t believe in the change usually resist the change. Reasons vary but can include: They see no value to the new way of operating; they believe the change is too difficult; they perceive the change as too risky. Other people may believe the wrong option was selected. Still others worry their job will be less important and they will no longer be experts.

Change fatigue. Change requires a great deal of mental effort. People who switch languages as they travel from country to country find themselves drained at the end of each day even if everyone they visit attempts to speak the traveler’s native language. The mental effort to understand the words spoken by individuals who do not speak a language well requires intense concentration. Too many new systems, reorganizations, mergers, or other changes can also create change fatigue. After a time, most people crave stability; at some point few people will make the extra effort required to undertake one more change.

Personal issues. Few people lead perfect lives and most worry about something. Individuals close to retirement, facing divorce, serious illness, or other personal issues frequently resist all changes in order to feel they retain some control over their life. Intellectually, these individuals may understand the reasons for the change but emotionally they often find it difficult or impossible to embrace the change. Handling each special case with compassion builds support for the change while insensitive handing can turn the rest of the enterprise against the change.

Resistance is not necessarily a sign of disloyalty or incompetence. Usually, it shows that the resisting individuals either don’t agree with the vision or lack the ability to implement the change. The best change management programs encourage people to discuss their concerns and never suppress dissent. After all, issues cannot be addressed if the OCM team does not know they exist.

How should a change management team be structured?

The OCM team should be integrated with the team responsible for implementing the change. The OCM sponsor should be a senior executive, often the CEO. The sponsor is the cheerleader who describes why the change is important and how it will help the enterprise. This person acquires necessary resources, establishes OCM goals along with consequences for failure to support the change.

The OCM sponsor is supported by an OCM project manager who directs the day-to-day activities of the OCM team. The OCM project manager works closely with the overall program manager responsible for implementing the change. Together the OCM project manager and the overall program manager coordinate training, communications, and supporter recognition.

OCM staff, known as OCM Champions, are supporters of the change who “sell” the benefits to specifics departments, business units, and individuals. They start working with their target group shortly after the program team begins planning. As part of change training, these Champions explain how the change will help the individuals affected.

After implementation, Champions continue to make sure the change is supported and used by the individuals whose jobs have changed. They continue to espouse the benefits of the change and pay particularly attention to anyone having difficulty with the change. Sometimes they merely listen; in other cases they obtain additional training or other help for the struggling individual.

The best Champions are well respected even though they may not be very high in the organization chart. They wield informal power as opinion leaders, performing their duties competently and with grace. Many have been with the enterprise for a long time. Frequently, they serve as informal coaches to new employees who may be more senior in the hierarchy. They motivate others, inspiring them to do a good job. Other employees seek them out to determine if the people leading a major initiative will be persistent enough to make the change stick.

Change Targets are the groups and individuals who need to change their behaviors and their attitudes. They are the recipients of training necessary to implement the change. As they become supporters of the change, they are usually recognized for their support.

What are the major steps in a change management program? Organization change management programs typically have fewer tasks and greater complexity than the program they are supporting. The OCM program has to adapt and change on the fly to accommodate the vagaries of human nature as supporters backslide and skeptics become supporters.

While there are different approaches to OCM, most can be summarized in the four major steps below:

The program begins when the sponsor creates a vision describing how the enterprise will operate after the change has been implemented. This vision should include the benefits that will accrue to the enterprise and should describe how the change will affect the staff. Ideally, improvements to the work environment will be obvious to the majority of the staff.

As part of engagement, the OCM team discusses the coming change with potential supporters to determine their willingness to support the change and to create a sense of urgency to implement the change. The OCM team also identifies likely skeptics and attempts to determine their concerns. In many cases, the team will commission a formal change readiness assessment to gain a more precise understanding of the enterprise’s willingness to change.

The OCM team identifies all departments, business units and groups that will need to change along with key stakeholders in each. In parallel, the OCM team analyzes how the various parts of the change will impact the way that people perform their jobs. This analysis enables the OCM team to answer the most common question posed during a major change, “What’s in it for me?”

As it becomes more obvious which stakeholders support the change, which are undecided, and which don’t support the change, the OCM team creates a change plan with specific actions for each individual and group. Individual OCM members are assigned to work with individual stakeholders based in part on the strength of the relationship between the OCM team member and the specific stakeholder.

During this phase, the OCM team begins to assess the degree to which stakeholders accept the change. At this point, acceptance measures are informal and based on impressions from meeting behavior, one-on-one discussions and other interactions.

During implementation, the OCM team communicates with individuals at all levels in the enterprise to gain their support for the change. Communications typically begin with a formal announcement from the CEO, supported by videos, emails, work station log-on announcements, town hall meetings, etc. The OCM team hopes to empower supporters and help individuals or groups become successful quickly. The OCM group identifies and celebrates successes publicly and rewards individuals responsible for each success.

As the rollout continues, attitudinal surveys are frequently employed to better gauge employee acceptance and commitment to the change. Special interventions are created and used for individuals and groups that appear reluctant to accept the change.

Because people rarely behave as others would like them to behave, the OCM team regularly revisits and updates change goals, rewards, communications and consequences. Experience is the best teacher. Repeated interactions with individual stakeholders usually reveals their degree of acceptance, enabling the OCM team to adjust its approach as necessary

Tasks, projects and behaviors that support the change should be part of individual performance plans. Items in the performance plan need to be clear, measureable and achievable. In addition, these items need to be weighted appropriately against the other goals in the performance plan.

Change management is rarely straightforward. The OCM plan may be depicted as a Gantt chart using the same tools as the IT project plan. However, in practice, OCM activities rarely have clear tasks, precedents and durations. Most OCM teams cycle through the four steps above multiple times during any OCM effort. Lessons learned at any point are incorporated into the OCM vision and communications. OCM work is not complete until the change is fully implemented and adopted by the people affected.

Who offers organizational change management certification?

A wide variety of universities and associations offer change management certificates and certifications. These include:

Michigan State University’s Eli Broad College of Business offers a professional Certificate in Change Management focusing on helping organizations alter existing processes, grow, introduce new products, reorganize or undertake other actions to be more competitive.

Stanford University’s Organizational Renewal program focuses on design thinking and innovation to implement change within an enterprise.

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